Countdown to overtime rule ticks closer

Pundits and prognosticators who are predicting a pre-summer release got a bump from learning that the Department of Labor’s (DOL) final overtime rule, officially titled “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees,” was submitted March 14 for executive review. Although there is no legal deadline, a typical timeframe would result in the final rule being issued in approximately 30 to 90 days.

The proposed rule

Last June, the DOL unofficially released its long-anticipated proposed rule to amend the FLSA’s overtime regulation (specifically, 29 CFR Part 541, the “white-collar” regulation, which
defines the executive, administrative, professional, outside sales, and computer employee exemptions from overtime). The most significant change: The rule would more than double—from $23,660 to $50,440, as projected for 2016—the current floor below which the white-collar exemptions from overtime would not apply. It also would increase from $100,000 to $122,148 the pay required for Part 541’s “highly compensated employee” exemption to apply. According to the White House, 5 million additional workers would be entitled to overtime within the first year alone, just by virtue of the increased salary threshold.

Changes to duties test?

The proposed rule was officially published in the Monday, July 6, Federal Register, thereby kicking off a 60-day comment period that closed September 4. The agency did turn a deaf ear on the inevitable pleas to extend an already narrow comment window on a controversial rule announced by way of an unusual notice of proposed rulemaking that, in part, seeks input on a series of open-ended questions on the duties tests—yet the DOL has offered no official stance on whether to implement a bright-line “primary duty” rule mandating that exempt employees perform at least a minimum percentage of exempt work, or to alter the substantive “duties” tests that inform whether a given employee falls within one of the FLSA’s professional exemptions from overtime pay.

Comments, letters

In addition to 5,775 comments by practitioners, some members of Congress also expressed their opinion on the rule. As written, the DOL’s “one-size-fits-all” proposed overtime rule “would adversely affect all employers, especially small businesses,” according to a February 9 letter that 100 lawmakers addressed to Labor Secretary Thomas Perez. The letter argues that the new rule fails to consider the negative consequences for employers. The lawmakers urged the DOL to reconsider moving forward with the rule as currently drafted.

“With the implementation of the rule, nearly 5 million employees would suddenly become eligible for overtime pay,” the letter states. “This 113 percent increase in the salary threshold would place a large burden of business owners and their workers, and is a major departure from previous DOL policy.” The lawmakers also argue that increasing the salary threshold so substantially ignores geographical diversity, with “drastically different” purchasing power of the dollar in various parts of the country. Moreover, the Labor Department has ignored differences between urban and rural areas.

The letter also expresses concern about the DOL’s lack of clarity as to its plans for the duties test, which is a main component in determining whether an employee is exempt from the FLSA’s overtime provisions. “A series of questions is not a viable substitute for a concrete regulatory proposal—the businesses affected by this rule need specific language they can consider and comment upon before any changes to the duties test are finalized,” according to the lawmakers.

Meanwhile, a petition filed February 4 on whitehouse.gov, “Tell the Department of Labor to move quickly on implementing the new overtime rule,” has received over 113,000 signatures and its own hashtag, #TimeforOT.